Case: 3:14-cv-00513-wmc Document #: 404 Filed: 06/21/17 Page 1 of 15 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WISCONSIN CONSUMER FINANCIAL PROTECTION BUREAU, v. Plaintiff, Case No. 3:14-cv-00513 THE MORTGAGE LAW GROUP, LLP (d/b/a THE LAW FIRM OF MACEY, ALEMAN & SEARNS); CONSUMER FIRST LEGAL GROUP, LLC; THOMAS G. MACEY; JEFFREY J. ALEMAN; JASON E. SEARNS; and HAROLD E. STAFFORD, STIPULATED FINAL JUDGMENT AND ORDER AS TO THE MORTGAGE LAW GROUP,LLP Defendants. l NTRODUCTION The Consumer Financial Protection Bureau C'Bureau") commenced this civil action in this Court (the "Court") on July 22, 2014, through its complaint (4'Complaint") to obtain injunctive and monetary relief, including civil penalties, for alleged violations of the Mortgage Assistance Relief Services RuJe, 12 C.F.R. pt 1015 (2011), known as Regulation 0, and for alleged violations of sections 1031 and 1036 of the Consumer Financial Protection Act of2010 ("CFPA"), 12 U.S.C. 5531, 5536, by The Mortgage Law Group, LLP, d/b/a The Law Finn of Macey, Aleman & Seams ("TMLG"), Consumer First Legal Group, LLC, Thomas G. Macey,. Jeffrey J. Aleman, Jason E. Seams, and Harold E. Stafford. The Bureau and the Trustee (as defined below) for Defendant 1MLG (''Parties"), by and through counsel, have agreed to settle au claims of the Bureau against TMLG, and request that the Court enter this Stipulated Final Judgment and Order ("Order"). 1
Case: 3:14-cv-00513-wmc Document #: 404 Filed: 06/21/17 Page 2 of 15 FINDINGS 1. The Court has jurisdiction over the Parties and the subject matter of this action, and venue in the Western District of Wisconsin is proper. 2. The Complaint states claims upon which relief can be granted for Defendant TMLG's alleged violations of Regulation O and sections 1031 and 1036 of the CFPA, 12 U.S.C. 5531, 5536. 3. On April 7, 2014, before the commencement of the instant civil action, TMLG filed a voluntary petition for relief under chapter 7 of the United States Bankruptcy Code, 11 U.S.C. 101 et seq. (2012) ("Bankruptcy Code"), initiating a bankruptcy case pending in the United States Bankruptcy Court for the Northern District of Illinois (''Bankruptcy Court''), captioned In re The Mortgage Law Group, L.L.P., Case No. 14-12825 ("Bankruptcy Case"). 4. The instant civil action against Defendant TMLG, including the enforcement of a judgment other than a money judgment obtained in this action, is not stayed by the Bankruptcy Code, 11 U.S.C. 362(a), because it is ah exercise of the Bureau's police or regulatory powers as a governmental unit pursuant to 11 U.S.C. 362 (b)(4) and thus falls within an exception to the automatic stay. 5. Ronald R. Peterson.Esq., a partner in the law firm Jenner & Block L.L.P., has been appointed chapter 7 trustee ("Trustee") of Defendant TMLG. Pursuant to 11 U.S;C. 323, the Trustee is the representative oftmlg's bankruptcy estate and has the capacity to sue and be sued. 6. On December 5, 2014, the Bureau timely filed a proof of.claim in the Bankruptcy Case seeking $75,932,959.33 in restitution and civil money penalties for Defendant TMLG's violations of Regulation O and the CFPA as alleged in the Complaint. 2
Case: 3:14-cv-00513-wmc Document #: 404 Filed: 06/21/17 Page 3 of 15 7. The Bureau and the Trustee agree to entry of this Order, without adjudication of any issue of fact or law, to settle and resolve all matters in this dispute arising from the conduct of Defendant TMLG aueged in the Complaint to the date this Order is entered. The Trustee neither admits nor denies any allegation in the Complaint except as stated in this Order. 8. For purposes of this Order, the Trustee admits the facts necessary to establish the Court's Jurisdiction over Defendant TMLG, the Trustee and the subject matter of this action. 9. The Trustee is not operating the business of Defendant TMLG and is proceeding with an orderly liquidation under the Bankruptcy Code. Given that the Trustee has agreed not to seek permission to operate TMLG's business, the Bureau has agreed not to seek its customary injunction, compliance and reporting requirements. 10. The Trustee waives service under Rule 4(d) of the Federal Rules of Civil Procedure and waives all rights to seek judicial review or otherwise challenge or contest the validity of this Order. The Trustee also waives any claim that Defendant TMLG may have under the Equal Access to Justice Act, 28 U.S.C. 2412, concerning the prosecution of this action to the date of this Order. Each Party will bear its own costs and expenses, including, without limitation, attorneys' fees. L$:>\'t,, 11. By order dated'j'qi"\\jq\'\.\ 9, ~ a copy of which is attached as Exhibit A, the Trustee has obtained the approval of the Bankruptcy Court to enter into this Order. 12. Entry of this Order is in the public interest. DEFINITIONS 13. The following definitions apply to this Order: 3
Case: 3:14-cv-00513-wmc Document #: 404 Filed: 06/21/17 Page 4 of 15 a. "Affected Consumer" means any consumer to whom Defendant TMLG or its officers, agents, servants, employees, or attorneys sold or provided Mortgage Assistance Relief Products or Services between May 2011 and January 2013. b. "Debt Relief Product or Service" means any product, service, plan, or program represented, expressly or by implication, to renegotiate, settle, or in any way alter the tenns of payment or other tenns of a debt or obligation, including, but not limited to, a tax debt or obligation, between a person and one or more creditors or debt collectors, including, but not limited to, a reduction in the balance, interest rate, or fees owed by a person to a creditor or debt collector. c. "Defendants" means all the defendants in this action, individually, collectively, or in any combination, and each of them by whatever names each might be known, and their successors and assigns. d. "Effective oate" means the date on which this Order is entered by the Court. e. "Assistant Director for Enforcement'' means the Assistant Director of the Office of Enforcement for the Consumer Financial Protection Bureau, or his or her delegee. f. "Estate" or "TMLG Estate" means the bankruptcy estate created upon the filing of TMLG's chapter 7 petition by operation of law pursuant to 11 U.S.C. 541. g. "Mortgage Assistance Relief Product or Service" means any product, service, plan, or program, offered or provided to the consumer in exchange for I 4
Case: 3:14-cv-00513-wmc Document #: 404 Filed: 06/21/17 Page 5 of 15 consideration, that is represented, expressly or by implication, to assist or attempt to assist the consumer with any of the following: i. Stopping, preventing, or postponing any mortgage or deed of trust foreclosure sale of the consumer's dwelling, any repossession of the consumer's dwelling, or otherwise saving the consumer's dwelling from foreclosure or re;possession; ii. Negotiating, obtaining, or arranging a modification of any tenn of a dwelling loan, including a reduction in the amount of interest, principal balance, monthly payments, or fees; iii. Obtaining any forbearance or modification in the timing of payments from any dwelling loan holder or servicer on any dwelling loan; iv. Negotiating, obtaining, or arranging any extension of the period of time within which the consumer may: (i) cure his or her default on a dwelling loan, (ii) reinstate his or her dwelling loan, (iii) redeem a dwelling, or (iv) exercise any right to reinstate a dwellingloan or redeem a dwelling; v. Obtaining any waiver of an acceleration clause or balloon payment contained in any promissory note or contract secured by any dwelling; or vi. Negotiating, obtaining, or arranging: (i) a short sale of a dwelling, (ii) a deed-in-lieu of foreclosure, or (iii) any other disposition of a dwelling other than a sale to a third party who is not the dwelling loan holder. 5
Case: 3:14-cv-00513-wmc Document #: 404 Filed: 06/21/17 Page 6 of 15 The foregoing includes any manner of claimed assistance to consumers with respect to mortgages, including, but not limited to, auditing or examining a consumer's mortgage or home loan application. h. "Person" means an individual, partnership, limited liability partnership, company, limited liability company, corporation, association (incorporated or unincorporated), trust, estate, cooperative organization, or other entity. i. "Related Consumer Action" means a private action by or on behalf of one or more consumers or an enforcement action by another governmental agency brought against Defendant TMLG based on substantially the same facts as described in the Complaint. j. "Trustee" means Ronald R. Peterson, Esq., or any person subsequently appointed as chapter 7 trustee in the Bankruptcy Case. k. The words "and" and "or" will be understood to have both conjunctive and disjunctive meanings as necessary to make the applicable phrase or sentence inclusive rather than exclusive. ORDER IT IS ORDERED that: I. Cessation of Business Activities 14. As of the Effective Date, Defendant TMLG, whether acting directly or through any other Person, and the Trustee, whether acting directly or through any Person employed by him, are pennanently enjoined and restrained from operating TMLG's business, including providing or offering to prov~de any Mortgage Assistance Relief Product or Service or any Debt Relief Product or Service. 6
Case: 3:14-cv-00513-wmc Document #: 404 Filed: 06/21/17 Page 7 of 15 II. Order to Pay Redress IT IS FURTHER ORDERED that: 15. A judgment for monetary relief is entered in favor of the Bureau and against Defendant TMLG's Estate in the amount of$18,331,737 under section 1055(a) of the CFPA. 12 U.S.C. 5565(a), for the purpose of providing redress to Affected Consumers for the violations described in the Complaint. This redress is to compensate consumers for their actua1 pecuniary losses. 16. This monetary judgment will be deemed by the Trustee to be an allowed general unsecured claim against TMLG's Estate, subjectto 11 U.S.C. 507(a) and 726 governing priorities of expenses and claims in the Bankruptcy Case. 17. Any funds received by the Bureau in satisfaction of this judgment shall be deposited into a fund or funds administered by the Bureau or its agent in accordance with applicable statutes and regulations to be used for redress for Affected Consumers, including, but not limited to, refund of moneys, restitution, damages, or other monetary relief, and for any attendant expenses for the administration of any such redress. 18. lfthe Bureau detennines, in its sole discretion, that providing redress to consumers is wholly or partially impracticable or if funds remain after the administration of redress is completed, any funds not used for equitable relief will be deposited in the U.S. Treasury as disgorgement. The Trustee will have no right to challenge the choice of remedies under this Section or to contest the manner of distribution. 19. Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. 7
Case: 3:14-cv-00513-wmc Document #: 404 Filed: 06/21/17 Page 8 of 15 Ill. Order to Pay Civil Money Penalty IT IS FURTHER ORDERED that: 20. By reason of the violations of law alleged in the Complaint, and taking into account the factors set forth in the CFPA, 12 U.S.C. 5565(c)(3), a civil money penalty in favor of the Bureau and against TMLG's Estate is ordered in the amount of$20,815,000. 21. The Bureau will deposit any payment made to satisfy the judgment for a civil penalty into the Civil Penalty Fund administered by the Bureau under section 1017(d) of the CFPA, 12 U.S.C. 5497(d). IV. Additional Monetary Provisions IT IS FURTHER ORDERED that: 22. Subject to 11 u.s.c. 507(a) and 726 governing priorities of expenses and claims in the Bankruptcy Case, the Trustee must relinquish all dominion, control, and title to the funds paid to the fullest extent permitted by law and no part of the funds may be returned to Defendant TMLG's Estate. 23. lit the event of any default on the Trustee's obligations to make payment under this Order, interest, computed under 28 U.S.C. 1961, as amended, will accrue on any outstanding amounts not paid from the date of default to the date of payment, and will immediately become due and payable. 24. Under 31 U.S.C. 7701, the Trustee must, unless he has already done so, provide the Bureau with Defendant TMLG's taxpayer identifying numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. 25. Within 30 days of the entry of a final judgment, order or settlement in a Related Consumer Action, the Trustee must notify the Assistant Director for Enforcement in writing of the 8
Case: 3:14-cv-00513-wmc Document #: 404 Filed: 06/21/17 Page 9 of 15 final judgment, order or settlement. That notification must include the amo\lllt of redress, if any, that Defendant TMLG's Estate paid or is required to pay to consumers and describe the consumers or classes of consumers to whom that redress has been or will be paid. V. Pendency of Bankruptcy. Case IT IS FURTH.ER ORDERED that: 26. The Bureau must. if it has not already done so, seek leave of the Bankruptcy Court to amend and reduce its proof of claim to confonn with the judgment amounts set forth in this Order. 27. The Trustee shal1 not object to the Bureau's proof of claim as amended. 28. The Trustee's obligations under this Order will terminate upon the closure of the Bankruptcy Case. VI. Reporting Requirements IT IS FURTHER ORDERED that: 29. Given that Defendant TMLG's Estate is being liquidated and the Trustee is not operating and will not seek to operate the business of TMLG, extensive compliance obligations by the Trustee are not warranted. The Trustee shall notify the Bureau of the occurrence of any of the following: a. The Trustee's discovery of any assets in the Estate or any assets that could be the subject of a turnover motion by the Trustee; b. The Trustee's filing of a motion under 11 U.S.C. 363 in the Bankruptcy Case to use, sell or lease property of the Estate; c. The Trustee's filing of any interim report to the Bankruptcy Court; and d. The closure of the Bankruptcy Case. 9
Case: 3:14-cv-00513-wmc Document #: 404 Filed: 06/21/17 Page 10 of 15 33. Within 21 calendar days of receipt of a written request from the Bureau, the Trustee must provide any documents or information that are the subject of the request that are reasonably available to him. 34. Nothing in this Order will limit the Bureau's lawful use of civil investigative demands under 12 C.F.R. 1080.6 or other compulsory process. IX. Release 35. The Bureau releases and discharges Defendant TMLG's Estate from all potential liability for violations of law that the Bureau has or might have asserted based on the practices described in the Complaint, to the extent such practices occurred before the Effective Date and the Bureau knows about them as of the Effective Date. This release does not preclude or affect any right of the Bureau to determine and ensure compliance with the Order, or to seek penalties for any violations of the Order. 36. This Order shall not prejudice. or otherwise negatively affect the Bureau's claims against the Defendants in this action other than TMLG. Nothing in this Order shab be deemed to preclude the Bureau from pursuing its claims against the remaining Defendants in this action or to release the remaining Defendants from the Bureau's claims. 37. Nothing in this Order is intended to permit, nor does the Bureau assert, a claim against the Trustee in his personal capacity. X. Retention of Jurisdiction 38. The Court shall retain jurisdiction over matters pertaining to the Order for purposes of its construction, modification, and enforcement. The Parties may jointly seek to modify the terms of the Order, which may be modified only by Court order. 11
Case: 3:14-cv-00513-wmc Document #: 404 Filed: 06/21/17 Page 11 of 15 SO ORDERED this d:b?t: day of..:r U.V\ e._ ENTERED this? l,fday of June, 2017 Peter A: Oppeneer, lerkofcourt United States District Court for the Western District of Wisconsin 12
Case: 3:14-cv-00513-wmc Document #: 404 Filed: 06/21/17 Page 12 of 15 Exhibit A
Case: 3:14-cv-00513-wmc Document #: 404 Filed: 06/21/17 Page 13 of 15 Case 14-12825 Doc 46 Filed 01/09/17 Entered 01/10/17 16 :21:13 Desc Main Document.. eme 1 of 2 UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS Eastern Division In Re: ) THE MORTGAGE LAW GROUP, L.L.P., ) ) ) ) ) Debtor(s) ) BK No.: 14-12825 Chapter: 7 Honorable Donald R. Cassling ORDER GRANTING MOTION TO SETTLE CLAIMS OF CONSUMER FINANCIAL PROTECTION BUREAU TIIlS MATIER COMING TO BE HEARD upon the Trustee's Motion to Settle Claims Of Consumer Financial Protection Bureau (the "Motion") (capitalized terms undefined shall have the same meaning attributed to them in the Motion); the Court finds that (i) it has jurisdiction over the matters raised in the Motion pursuant to 28 U.S.C. 1334; (ii) this is a core proceeding pursuant to 28 U.S.C. 157(b)(2); (iii) the relief requested in the Motion is in the best interests of the Debtor, its estate, and its creditors; (iv) the Trustee has given proper and adequate notice of the Motion and the Court has given hearing thereon and no other or further notice is necessary; and (v) upon the record herein after due deliberation thereon, good and sufficient cause exists for the granting of relief as set forth herein, IT IS HEREBY ORDERED that: I. AU objections to the Motion or the relief requested therein whether made or not, and all reservations of rights included therein, are overruled and disallowed on the merits. 2. The Stipulated Judgment between the Trustee and the CFPB attached to the Motion is approved. 3. The Trustee is authorized to execute, deliver and file all necessary documents and to perform all necessary ministerial actions to effect the tenns of the Stipulated Judgment. 4. The Bureau's claim against the Debtor's estate is hereby reduced and allowed in the amount of $39,146,737. 5. The Stipulated Judgment is without adjudication of any issue of fact or law, to settle and resolve all matters in the Action arising from the conduct of the Debtor alleged in the Complaint initiating the Action to the date the Stipulated Judgment is entered. The Trustee neither admits nor denies any allegation in the Complaint except as stated in the Stipulated Judgment. The Stipulated Judgment is binding only on the CFPB and the Trustee as the representative of the Debtor's Estate, and not on any third party. 6. The Court shall retain jurisdiction over any matter or dispute arising from or relating to the implementation of this Order.
Case: 3:14-cv-00513-wmc Document #: 404 Filed: 06/21/17 Page 14 of 15 Case 14-12825 Doc 46 Filed 01/09/17 Entered 01/10/1716:21:13 Desc Main Document Page 2 of 2 Enter: Dated: January 09, 2017 Honorable Donald R. Cassling United States Bankruptcy Judge Prepared by: Ronald R. Peterson (02188473) Landon S. Raiford (6297473) John D. VanDeventer (6315809) JENNER & BLOCK LLP 353 North Clark Street Chicago, Illinois 60654 PH: 312/222-9350 FAX: 312/527-0484
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